The Federal Reserve cut a key interest rate by three-quarters of a percentage point on yesterday, as recession fears continue to grow amid a global sell-off and a falling futures market.  The Fed said it was reducing the federal funds rate -- the interest rate that private depository institutions, mostly banks, lend balances at the Federal Reserve to other depository institutions -- to 3.5 percent from 4.25 percent.

The central bank said a weakening economic outlook and increasing downside risks to growth prompted its action. "While strains in short-term funding markets have eased somewhat, broader financial market conditions have continued to deteriorate and credit has tightened further for some businesses and households," the Fed said in a news release. "Moreover, incoming information indicates a deepening of the housing contraction as well as some softening in labor markets." The Fed said it expects inflation to moderate in upcoming quarters, but that it will be necessary to monitor it. Also, it said appreciable downside risks to growth remain.

Our local mortgage expert David Reed with CD Reed Morgage indicated that rates have come down so far, so fast that there might not be a better time if you or buying or selling. David said, "In the slower months of winter, having mortgage rates touch 5% is just icing on the cake.  Rates have now come down a full percentage point over the past five weeks and that means homes are now more affordable than they were in November and December.  A buyer looking who fell in love with that $300K dream home, but could only qualify for $275K, can now qualify for their dream!"

The view from here....that is great news for buyers as well as sellers because this new affordability factor widens the pool of potential buyers as well as potential properties to purchase.